Summary

ICPAK chair Julius Mwatu says the change in VAT regime for essential items such as cooking gas, bread, sugar and maize flour that shifts them from zero rating to VAT tax exempt will hurt the pockets of most Kenyans.

He called on the Treasury to review the decision saying that the tax measure will also make it impossible for manufacturers to claim input on VAT, a cost that will most likely be passed on to consumers.

The institute also said increased excise duty on money transfer services and kerosene means additional pain for low income households.

Accountants fault Treasury’s tax plan

Accountants have faulted Treasury’s plan to impose tax on basic commodities and services arguing that the move will further aggravate the already high cost of living and hit the poor most.

Chairman of Institute of Certified Public Accountants of Kenya (ICPAK) Julius Mwatu, Tuesday said the change in Value Added Tax (VAT) regime for essential items such as cooking gas, bread, sugar and maize flour that shifts them from zero rating to VAT tax exempt will hurt the pockets of most Kenyans.

He called on the Treasury to review the decision saying that the tax measure will also make it impossible for manufacturers to claim input on VAT, a cost that will most likely be passed on to consumers.

The institute also said increased excise duty on money transfer services and kerosene means additional pain for low income households.

“We note that these are basic consumables for the citizens among whom some live below a dollar a day.”

“Any trigger that increases the cost of these commodities adds to the high cost of living experienced already. We therefore advise the government to reconsider this with a view to making the burden of the citizens lighter,” said Mwatu.

Treasury CS Henry Rotich on Thursday said that he intends to increase excise tax on mobile money transfers from 10 per cent to 12 per cent.

He also raised kerosene levy from Sh7.21 per litre to Sh10.31 to match that of diesel, with low income households that use the fuel for lighting and cooking the most affected.

“We believe that other than imposing further taxes on basic commodities, the government can explore other innovative ways of raising revenues to fund the projects and programmes that would improve food security whilst cushioning the low-income households against the brunt of increase in prices of other basic commodities,” he said.